Page 5 - 2018 Apple Annual Report

partnerships in this area is critical as our distributors face mounting challenges to labor, capacity, industry mandates, and

other input costs. We will need everyone’s participation to make this a reality.

Thank you to the other Apple Co-op and CSCS Board Members for devoting their time and talents to providing the right
levels of governance and direction to the CSCS management team. And thank you to all CSCS Members for engaging in

system excellence through the supply chain. CSCS is here to help us identify the right changes for our supply chain, and
your engagement helps turn those changes into our competitive advantage.

MIKE LEIKAM

President & CEO, Centralized Supply Chain Services, LLC

" we need to do everything we can to

continue to foster partnerships with
our distributors that are both fair and

transparent, and that position us as a
"
customer of choice.

The theme of this annual report, “Driving Change” reflects one of our six Core Values, Continuous Improvement, and
represents the approach we took to delivering value to our Members in 2018. There are no better examples than our
implementation of the new Restaurant Profitability Management program (RPM) with Applebee’s and how we are working
collaboratively with our distributor partners and Members to mitigate the challenges faced across today’s distribution
landscape.

Together with Applebee’s, we engaged the consulting firm, PricewaterhouseCoopers (PwC), and launched the RPM project
with three objectives. First, we needed to find different ways to help improve your margins while maintaining product
quality and the customer experience. This was not to be a “slash and burn” exercise to simply save money. The new
cross-functional process with Applebee’s includes safe guards to ensure that does not happen.

Second, we established a governance structure to oversee this work in the form of a steering committee. The RPM
SteerCo is comprised of Applebee’s leadership, CSCS leadership and David Paradise, Jeff Warden, and Brad Pettinger, as
franchisee representatives. This group prioritizes the opportunities and aligns on the appropriate testing required for each
savings or product improvement idea.

Finally, PwC provided suggestions to help us improve our capabilities, from how Applebee’s develops new products to how
we source them. Most importantly, PwC helped Applebee’s and CSCS implement processes for working better cross-
functionally to get more ideas vetted and implemented faster. In 2018, the team delivered projects totaling $30MM in
annualized value to the system. We are excited about what we can accomplish working with Applebee’s in this manner
going forward.

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